“If you want AI, you need power” - and the investment bill is astronomical

Infrastructure is often labelled a “boring” investment. Defensive. Predictable. Reliable. I went into this conversation with limited knowledge of the asset class, and came away surprised by how much I had been overlooking.

Speaking with Sarah Shaw from 4D Infrastructure quickly challenged the idea that infrastructure is merely a background allocation in portfolios. While it still offers the stable, long-dated cash flows investors associate with the asset class, it is now directly linked to some of the most powerful forces shaping the global economy.

The prevalence of middle class consumers, population growth, ageing infrastructure in developed markets, the energy transition and the rapid rise of technology are no longer abstract trends; they all demand real, ongoing physical investment.

What struck me most was how unavoidable these forces are. Unlike many investment narratives that rely on supportive policy, favourable cycles or political stability, infrastructure sits beneath them all. Economies do not function, let alone grow, without it. Decarbonisation, electrification and AI ambitions simply stall if the foundations are not already in place.

“There are five big growth dynamics that are supporting infrastructure, which as I always say, they’re going nowhere. They literally must happen. It doesn’t matter who’s running the US, it doesn’t matter about inflation, interest rates or war - these must happen," she says.

That sense of inevitability reframes infrastructure not as a defensive afterthought, but as one of the clearest long-term expressions of how the world is actually evolving.

Infrastructure’s evolution from defensive to structural growth

For much of its listed history, infrastructure was treated as a bond proxy, offering stable cash flows, regulated returns and modest growth. That reputation still lingers, but Shaw argues it no longer reflects reality.

“Infrastructure has evolved from what was historically considered a nice, safe haven bond-style investment proposition with low growth, but a good yield," she says.

While the assets themselves have always existed, the recognition of listed infrastructure as a standalone asset class is relatively recent. Shaw notes that it has “probably only been recognised as an asset class for 20-25 years now”, coinciding with a shift in ownership as governments increasingly transferred critical assets into private hands.

That process has significantly expanded the opportunity set, creating a deeper and more investable universe.

More importantly, the growth profile has changed. Infrastructure still offers long-dated, visible earnings, but it is now supported by multiple overlapping structural tailwinds. 

“What’s changed over the 20 years is the evolution of growth thematics surrounding the asset class," says Shaw.

What matters is not any single theme, but how they reinforce each other. Each requires sustained investment in its own right. Together, they create a compounding demand for infrastructure that is difficult to replicate elsewhere.

Crucially, these dynamics are not discretionary. As Shaw repeatedly emphasised, they are “going nowhere” and “must happen” - a distinction that sets infrastructure apart from many other thematic investments.

Geopolitics, volatility and looking through the noise

While infrastructure investing is long-term by nature, it is not immune to short-term volatility. Shaw is clear that geopolitics and macroeconomic conditions matter, particularly given the long life of infrastructure assets and their reliance on regulation.

“One of the big headwinds we always watch is geopolitics, because that clearly drives regulatory outcomes as well as investment decisions," she says.

At present, her focus is firmly on geopolitics and the macro cycle. From trade negotiations involving the US, Canada and Mexico to political uncertainty in parts of Europe and key elections across emerging markets, policy risk remains elevated.

The Trump factor, in particular, is hard to predict. Shaw is blunt about the limits of forecasting, noting that “it’s a fool’s game to try and predict what he’s going to do.” Rather than trying to anticipate every policy shift, the emphasis is on understanding where decisions genuinely affect long-term asset fundamentals and where they simply add noise.

“We try to look through the volatility, ignore the noise and look at the long-term fundamentals," says Shaw.

That perspective reflects the nature of the assets themselves. Over the course of our conversation, it became clear that infrastructure investments are long-dated and shaped by regulation and structural demand, which means prices can move in the short term even when the underlying fundamentals remain intact.

Why power, grids and energy security sit at the centre

If there is one area Shaw repeatedly returned to, it is utility networks and grids. At 4D Infrastructure, more than half of the portfolio is allocated to companies with network exposure, and that concentration is deliberate.

“Every one of those thematics I talked about depends on huge investment in these networks or grids," she says.

Every major infrastructure theme runs through them. Renewable generation cannot function without grid connectivity. Population growth increases electricity demand. Emerging markets require reliable networks to support rising living standards. And AI and data centres are dramatically increasing power intensity.

“If we want to rely on AI… Then the need for investment into power security is astronomical," says Shaw.

The scale of the investment required is not incremental — it is enormous. Existing grids in many developed markets are old and underinvested, while power demand is rising faster than anticipated due to electrification and technology. 

Shaw points to real-world examples to illustrate the consequences of underinvestment, from automation failures caused by brief power losses to large-scale blackouts driven by grid instability.

“If you want to rely on automation, you can’t lose power — the consequences can be catastrophic,” she says.

Importantly, regulated network assets offer a relatively low-risk way to invest in this build-out. Returns are tied to capital invested, meaning earnings growth follows asset base growth. As Shaw explained, “every dollar I put to work, I get a return on,” provided assets are executed efficiently and regulatory frameworks remain intact.

Energy transition: ambition meets affordability

The energy transition is one of the most powerful tailwinds for infrastructure, but Shaw is careful to highlight its complexity. While net zero commitments and sustainability goals are driving investment, execution must balance environmental ambition with reliability and affordability.

“We need to do it in a balanced way - you can’t go too fast otherwise you have blackouts or you won’t have security of supply. Wind and solar are not there yet without huge battery systems to support baseload generation," she says.

Shaw explained this is why gas, nuclear and hydro continue to play essential roles. Moving too quickly without adequate backup risks not only blackouts, but rising energy costs and unintended social consequences.

Affordability is a recurring concern. Shaw stresses that access to reliable power is not just an environmental issue, but a social one. If energy prices rise too sharply, vulnerable households suffer. “That’s a social consequence,” she said, pointing to the real-world impact of rising energy costs.

The challenge becomes even more pronounced in emerging markets. Around 85% of the global population lives in the emerging world, where per-capita power consumption is far lower than in developed economies. 

As Shaw noted, “we can’t deny 85% of the population the access to the power that we’ve enjoyed for 50 years.” As living standards rise, demand will increase — and meeting that demand sustainably will require enormous investment.

Brazil stands out as a compelling example. Its power system is already among the greenest globally, with hydro accounting for the majority of generation. 

“Brazil has one of the greenest energy sources in the world,” says Shaw, positioning it well for future growth while offering inflation protection through regulated infrastructure assets.

Portfolio positioning and the case for infrastructure in 2026

Beyond grids, Shaw highlights selective exposure to airports and toll roads, particularly in regions benefiting from tourism, population growth and middle-class expansion. 

She points to a structural shift in behaviour since COVID, arguing that “people are actually spending for today and worrying about the future later” - a dynamic that continues to support demand for transport infrastructure.

Geographically, the portfolio is tilted towards Europe and Latin America, with Brazil a key overweight. “We’re overweight Europe and Latin America,” Shaw says, reflecting a focus on assets with regulated frameworks, inflation protection and strong alignment with long-term growth drivers.

Looking ahead, Shaw is unequivocally positive on the outlook for infrastructure, while remaining realistic about near-term market conditions. 

“I’m bullish on infrastructure, absolutely bullish on the infrastructure fundamentals and outlook on markets,” she says, while also expecting “volatility and noisiness” to persist.

Her closing message from an asset allocation is upbeat - infrastructure should not be treated as a peripheral allocation.

“Infrastructure should be in every investor’s portfolio," she says.

And that’s what I hadn’t fully appreciated before. Infrastructure underpins many of the themes investors are already excited about - from AI to decarbonisation - and without it, those growth ambitions simply don’t get off the ground.

Managed Fund

4D Global Infrastructure Fund (AUD Hedged)

Alternative Assets

View

Managed Fund

4D Global Infrastructure Fund (Unhedged)

Alternative Assets

View